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Federal Reserve announces terms of loans to small businesses

The Federal Reserve Board announced a new lending program that should help agribusinesses.

A part of the financial recovery plan could generate up to $1 trillion of lending, including for purchases of farm equipment by agribusiness.

The U.S. Department of the Treasury and the Federal Reserve Board announced Tuesday the launch of the Term Asset-Backed Securities Loan Facility (TALF), which the government hopes will get credit flowing again.

Federal Reserve Bank of New York will lend up to $200 billion to eligible owners of certain AAA-rated asset-backed securities (ABS) guaranteed by the government, the Fed announced.

The Fed and treasury anticipate that ABS backed by rental, commercial and government vehicle fleet leases and ABS backed by small ticket equipment, heavy equipment and agricultural equipment loans and leases will be eligible for the initial round of April funding of the TALF.

Issuers and investors in the private sector are expected to begin arranging and marketing new securitizations of recently generated loans. On March 25, 2009, those new securitizations will be funded by the program, creating new lending capacity for additional future loans, the Fed said.